SOLAR ELECTRIC / PHOTOVOLTAICS
COST AND INCENTIVES

From our observations, Photovoltaic, grid-tied solar electric systems, generally range in cost between $5.30 and $7.00 per watts installed. The reason for the price difference is due to the complexity of the installation, the kind of solar electric equipment you choose and the fact that the bigger the system you buy the lower the cost per watt.

Our prices are higher than some and lower than others. However, what we feel we do better than all is our hands-on approach to each and every aspect to each and every install. Even before a job is started, we bring all potential projects, expert, personal and courteous customer service. This is something we will provide for you throughout your installation. We pick up our phones. If we are going to be late or if there is some deviation from expectations, we are on the phone discussing it with you. We also like to think of our installations as pieces of art, masterfully installed. We care about the quality of the components used and the eye for detail installations should have.

Average Household Electric Consumption

When looking at prices, one of the first thing folks want to know is what kind of an impact certain size systems will have on their electric bill. The answer to this question is…it depends. The average household in Portland consumes between 10,000 and 12,000 kilowatt hours in a year. In Portland, the amount of watts a system is rated for coincidentally is also the amount of kilowatts the system will generate throughout the course of a year. For example, a 3,000 watt system will produce +/- 3,000 kilowatt hours a year. To learn more about these photovoltaic grid-tied systems, click here or go to our PV FAQ page.

Site Specifications

There are a couple of site-specific technical specifications concerning your potential solar site you need to be aware of. One of the first things you want to think about when considering solar is how good of a solar site you have. The incentives that exist are really only meant to incent solar systems placed in the most optimal of locations. For the "Front Loaded" solar incentive program your house has to have a roof that has access to 75% or more of the yearly sun. This means you really can't have any shade falling on the roof where you want your solar system installed from 10 am to 4 pm. The roof does have that 25% leeway, but it gets used up pretty fast.

The other specification to be aware of is the life left remaining on your roof. The Energy Trust, especially, wants the roof your solar system goes on to have at least 10 years or more left remaining on it. If this is not something you can remember or verify and the roof life is a bit iffy, you should call a home inspector or a roofer to come on out and take a look at things. Make sure they leave you something in writing as proof you have 10 years or more left remaining on your roof.

The New "Solar Payment Program" has none of these requirements. However, in order for you to get your moneys worth, it would be a good idea to try to stick to the above parameters as closely as you can

Finally, don't feel you can't go solar just because you don't have a perfect solar site and are not eligible for all of the incentives. Every year Solar Energy Solutions installs systems that fall outside of the ideal scenario the incentives are set up to support.

Economic Reasons to GO Solar

Before we go any further, we should probably address the persistent issue of payback. Simply put, payback isn't the issue, because a simple arithmetic calculation of up-front costs versus reduced monthly expenses just doesn't capture the relevant factors. Just like a car, TV, cell phone, or whatever, the real payback is in having something that does something for you, not recouping the costs.

However, unlike any of the aforementioned things, there are strong economic reasons to considering going solar. Prices have fallen so much in the last year that installing a grid-tied photovoltaic system is now a great and sound way of inventing money. Systems can yield a return on investment of anything from 9% to 20% on your investment! Even in our cloudy climate these returns are all but guaranteed. And, solar systems increase your property value by the cost of the systems, yet because of the incentives, only cost you a fraction of that total. Of course, my favorite incentive is conservation.

Solar Incentives

There are currently two separate incentive pathways homeowners can take in order to better benefit financially from the installation of a grid-tied photovoltaic system. The first way is through existing pathways which provides "FRONT LOADED INCENTIVES" through the Energy Trust of Oregon and the Oregon Dept. of Energy. As of July 1st 2010, a second pathway, brand new to Oregon, will be introduced. PGE and Pacific Power are calling it a "SOLAR PAYMENT PROGRAM". To those of us in the industry, it is known as a Net-metering plus VIR (Volumetric Incentive Rate) or PBI (Production Based Incentive) Pilot Program.

OPTION ONE: The Solar Payment Program

The Solar Payment Program enables PGE and Pacific Power to pay homeowners and businesses a great price for the solar electric power they generate through a grid-tied photovoltaic system on their roof. (These systems also qualify for the 30% Federal Income Tax Credit) This "Solar Payment Program" is intended to reward and encouragement folks to install solar electric systems. PGE and Pacific Power are doing this on a price per kilowatt basis. Think of a kilowatt as a unit of measure like a gallon of gas. What this means is for every kilowatt hour you produce, with your grid-tied photovoltaic system, you will get a "Solar Payment" for the amount of energy you produce through your solar system at the established Solar Payment rates. Below is a chart showing which counties get what rates on what size systems. This table is used to help calculate your Solar Payments.

There are, of course, a couple of CAVEATS and THINGS TO BE AWARE of.

CAVEAT #1: This is a red-hot solar program which many, many folks are going to want to get in on because it is such a good deal. It is, however, a pilot program with an ending date of 2014 and with a limit as to how many projects can participate during a 6-month period of time. Qualifying is on a first come first serve basis. Once the designated capacity is use up for a given period of time, the program is temporarily closed out for the remainder of that period. Once a new period begins, applicants will have to reapply for the new period. There is no place holding.

CAVEAT #2: The price per kilowatt PGE and Pacific Power have to pay you is subtracted from the price and the amount of kilowatts you are buying from them. For example, say you consume 500 kilowatt hours in a month at a rate of $.10 per kilowatt-hour. This means you would owe your utility company $50.00 for the power you got from them. (50kWh x $.10 = $50.00) Now say your grid-tied photovoltaic system produced 250 kilowatt hours for you during this same month earning you a $162.50 Solar Payment. (250 kWh x .65 = $162.50). The check your utility company will send you will subtract the amount, and at the rate of energy they are charging you, from the amount and rate of your Solar Payment. i.e.: 250 kWh x $.65 = $162.50 - $25.00 = $137.50 Solar Payment.
(500kWh - 250kWh = 250 kWhs x $.10 = $25.00. $162.50 - $25 = $137.50) OR…($.65 - $.10 = $.55 x 250kWh = $137.50.) If you produce power more than you consume during any given month, or months, it is rolled over to the next month or months. There is an annual energy true out every year in March. At this time your energy balance sheet is wiped clean and a new year of solar energy productions is begun.

CAVEAT #3: In the highly unlikely, yet highly laudable, event that you produce more power than you consume… any power you produce over the course of a year that exceeds what you consume is lost. Your accountant may be able to advise you on how to make this loss a charitable tax deduction as the utilities give this energy to low-income households and doesn't declare the deduction on this charity themselves.

CAVEAT #4: The money your utility sends you is taxable.

CAVEAT #5: Homeowners who install these systems are required by the utility companies to have a 1 million dollar total umbrella liability policy in case of the unimaginable event that somehow, someone gets hurt by this system bolted up on your roof far away and all but accessible to anyone. What this means it is you have to bring your existing home's liability insurance up from where ever it is to 1 million dollars. It is thought such policies will cost in the ballpark of $25.00 - $225.00 per year. I called my agent and they said to bring my policy up to 1 million from the $500,000.00 I have on it already would cost an additional $25.00 / year.

THINGS TO BE AWARE OF #1: Grid-tied photovoltaic systems only work if they have an unblocked and unshaded view of the sun… year round… all day long. You should always check with Solar Energy Solutions, Inc. to make sure your installation scenario gets the best solar exposure it can and that fairly precise calculations are provided anticipating your yearly energy production from your system and your Solar Payment. If a solar system is installed incorrectly or through poor solar design you Solar Payment may not be as much money as you hoped for.

THINGS TO BE AWARE OF #2: While you are probably aware of the fact that Solar Energy Solutions, Inc. is a 23 year old Portland company known for its quality customer service and masterful installations which distinguishes them not only in the solar industry, but in the construction industry as a whole, you may not be aware of the fact that not all solar equipment is equal, either. What this means is that some photovoltaic panels and other equipment instrumental to your installation produce more energy and are more efficient than others. Solar Energy Solutions only carries the best. All of these designing elements are crucial to your solar system yielding as much power as it can and therefore yielding you the greatest return on your investment.

Economic Summary of the "SOLAR PAYMENT" incentive program

To summarize, if Solar Energy Solutions installs the 3kW photovoltaic system mentioned above on your sunny, unobstructed South-facing roof at $6.20 per watt your installed cost would be $18,600. This system would produce about 3000 kilowatts of power a year. If you live in Multnomah County you would qualify for the Solar Payment of $.65 per kilowatt-hour. 3000 kWh x $.65 = a Solar Payment of $1,950.00. Subtract $.10 for the power you are already getting from your Utility = $300.00 to get you the actual Solar Payment of $1,650.00. Don't forget to calculate in your 30% Federal Income Tax Credit!

Let's review the math!

$18,600.00 Installed cost for a 3kW system
- $5,580.00 Minus 30% Federal Tax Credit
$13,020.00 Cost after subtracting Federal Tax Credit (Please check with your accountant for details)

$13,020.00 divided by $1,650.00 = 7.89 year payback. After year eight you are $1,650.00 ahead every year!
OR…
$1,650.00 on $13,122.00 will yield a risk free return on your investment of 12.5%!

OPTION TWO: The FRONT LOADED incentive program

Under the existing "Front Loaded" solar incentive programs there are currently three entities which incent the installation of grid-tied photovoltaic systems: the Energy Trust of Oregon, the Oregon Department of Energy through a state income tax credit, and the Federal Government with a 30% federal income tax credit.

The Energy Trust of Oregon is funded by money it receives through PGE, Pacific Power, and Northwest Natural Gas. There are also a number of smaller utilities that pay into the program. These utility companies take 3% of the money we pay them in our bills and redirect it to the Energy Trust. The Energy Trust then redistributes this money into renewable energy, and energy conservation programs. The way this pens out for solar is in a direct reduction in price incentives. The reduction in price incentive varies by the size (DC nameplate rating) of your solar system and utility area. It varies by utility company because a Monarch butterfly landed on a budding rose that was then plucked and placed on Jim Morrison's grave. In other words…we don't know. What we do know is in PGE land, the Energy Trust incentive is $1.75 per watt up to $20,000.00 and in PP&L land it is $1.50 per watt up to $20,000.00. The greater in size and power rating of your grid-tied photovoltaic system, the greater the reduction in price incentive is from the Energy Trust of Oregon. For example: If you had Solar Energy Solutions install a 3Kw system that costs $18,750.00 and you lived in PGE land, you would qualify for a $5,250.00 reduction in price incentive. This $5,250.00 comes right off the top of what you would otherwise pay Solar Energy Solutions. This means your out of pocket cost to Solar Energy Solutions, Inc would be $13,500.00.

$18,600.00 Installed cost
- $5,250.00 Minus Energy Trust incentive
$13,350.00 Equals your out of pocket cost

Remember, the bigger the system the bigger the incentive!

The Oregon Department of Energy has, since 1986, been on the cutting edge of encouraging people to go solar by means of tax credits. Oregon's tax credit program for solar has always been an example to the rest of the nation of how states should be encouraging the use of solar energy. Like the incentive from the Energy Trust of Oregon, the state income tax credit is based on the size of a system. Different sized systems qualify for different tax credit incentives. Also, like the Energy Trust, the state is only looking to incent ideal solar scenarios. The maximum state income tax credit for a photovoltaic system is $6,000. This $6,000 tax credit is absorbed over a four year period of time in $1,500 increments. You get this tax credit incentive when you file your state income taxes. Remember, this is a tax credit, not a tax deduction. Tax credits are better than tax deductions because they come right off of your state income tax liability. For example, say you have paid the State of Oregon $4,000 in income taxes throughout the course of the year. Because of deductions and allowances, say you get $500 back. Well, if you install a large enough photovoltaic system, you can get back an additional $1,500 a year, for four years.

People are always complaining about how they never get anything for their tax dollar. Here is a way you can get your tax dollar right back into your pocket and install a solar system to boot. But remember, you do have to pay a state income tax in order to get the tax credit. If your income tax liability is low, the state gives you up to 5 years to absorb the full amount.

I remember when I received my $1,500 tax credit when I installed my solar hot water system in 1992. It was an afternoon in May and I was doing some office work when I heard the mailman come to the door. On this particular day he only had one piece of mail and it was from the Oregon Department of Revenue. With one eye closed and the other half open, I opened the letter wondering what the bad news could be. But then, as I peeked inside, what should my wary eyes see? A check for $1,500 bucks. Yippee! I said as I ran through the offices yelling, "Isn't government GREAT?!" How often can a person yell that?!

The Federal Government is the final place currently available for solar incentives. There is a 30% federal income tax credit. Unlike any of the other incentives, there are no technical or solar site specifications on this incentive. No matter how big or small your system is, how sunny or shady your site is, how new or old your roof is, you qualify for the federal income tax credit. However, it does assume you pay what is called a minimum federal tax. So, it would be wise to talk to your tax person first on this matter. But, assuming you qualify, it is like the state income tax credit, a dollar for dollar tax credit, going against your federal income tax liability. The federal tax credit is applied after deducting the Energy Trust of Oregon reduction in price incentive from the installed cost.

Economic Summary of the FRONT LOADED incentive program

To summarize, if Solar Energy Solutions installs a 3Kw photovoltaic system mentioned above for $18,600 it would qualify for the Energy Trust of Oregon reduction in price incentive of $5,250. It would also qualify for the state income tax credit of $6,000, (absorbed over a four year period of time in $1,500 increments), and a federal income tax credit of $4,005. This means under this scenario, there would be a total of $15,255 worth of incentives. This would ultimately bring your total system cost down from $18,600.00 to $3,345.00. WOW!

$18,600.00 Installed cost
- $5,250.00 Minus the Energy Trust incentive
$13,350.00 Out of pocket cost
- $6,000.00 State income tax credit
- $4,005.00 Federal income tax credit
$3,345.00 Net cost!

This 3kW system would save you around $300.00 a year in Utility bills.

$3,345.00 divided by $300.00 = 11.15 year payback. After year eleven you are $300.00 ahead every year! OR…

$300.00 on $3,345.00 will yield a risk free and tax free return on your investment of 8.96%! Better still, this return on investment will double or quadruple over the course of ten years because energy prices tend to double or quadruple over the same period of time.

Conclusion: Regardless of whether you choose the "Front Loaded" solar incentive program or the "Solar Payment" incentive program, they are both GREAT deals where one can only conclude one thing. NOW is the time to GO SOLAR!